As you visit various shopping centers across the country you will see an assortment of companies and business types. These companies range from clothing stores, grocery, insurance offices, fitness centers, dentists, dance studios, doctors, real estate companies and the list goes on. To the everyday person this is common place and one takes no second thought to the various mix of companies cohabitating the myriad of retail centers. Unfortunately for many of the businesses, before they could open their doors they had to spend months going through various municipality meetings and pay a fee to allow their use into such a center. This time, effort and jumping through hoops, is due to the fact that they fall under the zoning category of Special Use.
Each city is designed by a zoning board which dictates what type of development can be built on that property. For each zoning classification there are rules that must be met to develop that property. In the case of commercial property it also provides a list of the types of business that may operate at that building. Taking the case of retail, the reason a municipality wants retail is for sales tax, so if a non-sales tax generating business wishes to open at a retail center there may be obstacles to over come.
The first thing a company should do is work with an experienced and thorough commercial real estate broker. As in the case with our client, Top Driver, they desire to have the retail exposure and convenience for their clients by being in a retail center. Top Driver is a driving education school so they do not produce sales tax. In this case we have to first investigate available properties that meet their space criteria. After we select the top spaces we call the listing broker and discuss our requirement and how our client does not produce sales tax. Sometimes the brokers know the zoning already and give us the red or green light. Even when the listing broker states we are green lighted we will still call the municipality to get their confirmation.
Special Use Process
Some properties may allow our non-sales tax use but will require our client to go through a Special Use Permit process. This varies from municipality to municipality and below is a typical timeline:
Application for Special Use with fee
The fee can vary from a couple hundred dollars to a couple thousand dollars. Your CRE broker should have found out the total cost during their call with the municipality.
Get on municipality board meeting agenda
Most boards meet once a month so depending on when you apply it could be a month or more before you are on the agenda.
Sign on property
You will need to have a Public Notice sign put up on the property per the municipality’s requirements.
Attend first meeting
The public is invited to discuss their concerns on your use at the property. Try to have the owner of the property, your broker and anyone that will boast your business and provide positive reasons why your business should be at the center.
It usually takes a second meeting of the board to give final approval and the green light. This may be later in the month by a different committee or the following month.
Once you are approved you may start your construction. Of course you need your building permits. Some municipality’s will allow you to file after the first meeting if all went well. Some may make you wait until the final approval. Find out ahead of time as this can have a negative or positive impact on your move-in timeline.
Understanding a property’s zoning is critical for all businesses as this can have an impact in all industries. Make sure to check the zoning maps, contact the municipality and work with an experienced broker to guide you through the process.